It’s hard to fire people in Australia. I’ve read a judgement this month from the High Court of Australia that has wide-ranging implications for employers who may be undergoing restructures or making employees redundant; it’s so significant in my view that it may prove to be a precedent case in years to come. But at a time when co-called “Same Job, Same Pay” and “Closing Loopholes” amendments to the Fair Work Act (“FW Act”) have already re-regulated Australia’s labour market and reduced flexibility available to businesses, it’s the newfound prominence of a hitherto unremarkable section of the FW Act that will really send shivers down the spines of employers.
That’s the upshot, in short, of the High Court’s decision in Helensburgh Coal Pty Ltd v Bartley [2025] HCA 29. It will no longer simply be a case of confirming there are no suitable vacancies for employees whose roles are no longer required and closing the door on them, but rather considering whether any changes are required to broader workforce arrangements to meet redeployment obligations.
That process – “thank you for the memories, but goodbye” – is now going to be that much more difficult.
Does the High Court’s decision hand the Fair Work Commission (FWC) free reign to mandate the restructure of broader business arrangements in such circumstances? “Side hustles” are all the rage these days: does its decision turn company restructuring into a side hustle for the FWC? Their Honours’ interventionist interpretation of the FW Act adds up to a very big “yes.”
First, let’s look at the case.
Like many companies that used COVID-19 as a pretext to review business operations and downsize – who doesn’t know someone who was let go in lockdown? – Helensburgh Coal dismissed 22 employees from its Metropolitan Coal Mine in 2020 in a restructure prompted by the pandemic. In turn, these employees brought unfair dismissal claims in the FWC. Helensburgh argued the dismissals were “genuine redundancies” under the FW Act, precluding the employees’ claims. The FWC found the dismissals were not genuine redundancies because it would have been reasonable for the employees to be redeployed into roles performed by contractors.
At issue was section 389(2) of the FW Act, which deals with redeployment. Can the FWC examine whether an employer could make changes, such as replacing contractors with employees, to facilitate redeployment?
The High Court unanimously found that section 389(2) does permit the FWC to consider whether an employer could have made changes to make positions available for otherwise redundant employees. Its inquiry under section 389(2) is not limited to existing vacancies within the employer’s enterprise at the time of dismissal.
It considered the word “redeploy,” by its ordinary meaning, “envisages some reorganisation or rearrangement” and does not exclude or prohibit change to how an employer uses its workforce to operate its enterprise that facilitates redeployment. Thus, there need not be a vacant position in the enterprise for it to be reasonable to redeploy the person. (Am I the only one who finds that concept slightly bizarre?)
The Court also emphasised that what is “reasonable in the circumstances” under section 389(2) is a broad question, and should take into account factors including the employer’s workforce structure, risk appetite, contract terms, and the skills and experience of the dismissed employees. However, this can only be determined by reference to the employer’s enterprise as it existed at the date of dismissal…
…and that means looking into other arrangements the employer had in place at the time of the redundancies, beyond the workforce of employees, including consideration of contractors and labour hire personnel who could be replaced in employed roles by those whose original roles were no longer required.
The decision will add complexity for businesses in justifying redundancies in any restructure. The Court’s focus on the broader scope for redeployment means employers will need to justify their entire workforce arrangements, including contractors and labour hire, when defending unfair dismissal claims triggered by redundancies. If they don’t, the FWC is likely to do it for them in the wake of their Honours’ decision.
Employers will need to contemplate these realities when determining whether employees can be redeployed. Restructures will require careful navigation to mitigate employers’ risk: the straightforward solution of cutting headcount to slash costs is complicated by the High Court’s judgement and its implications.
Meanwhile, people still lose their jobs: contractors and labour hire personnel, who may have worked in the enterprise for considerable periods and accrued valuable organisational knowledge and IP, can be shown the door while the employee cohort gains a reprieve at their expense. It’s like robbing Peter to pay Paul.
My view is that employers should prepare for increased FWC scrutiny into bona fide restructures alongside a potential escalation of unfair dismissal claims from employees made redundant as part of changes made to their workforces arising from those restructures.
Steps employers may take in response to the High Court’s judgement include:
- Consider organisational workforce structures holistically (including contractors, labour hire employees and casual/part-time employees) in the overall rationale for a restructure and build this into the business case;
- Ensure redeployment processes consider the appropriateness of broader workforce changes that may result in suitable redeployment opportunities;
- Document all processes and considerations, including consultation with employees and consideration of their suitability for possible redeployment opportunities.
Rankin Business Lawyers specialises in employment law matters. If your business requires restructuring and you need advice on how to proceed – without falling afoul of these changes – please get in touch.
